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Question 1 of 10
1. Question
Which of the following is correct regarding the underlying or spot virtual currencies provided by the National Futures Association?
Correct
A member shall display the advisories and disclosures on a member’s website in order to be considered sufficient. It is also sufficient if the distribution methods are designed to achieve customer awareness and the disclosure language is prominently displayed. They must also consider including the activities and disclosure language in a booklet of risk disclosure. This booklet will then be distributed to customers or sending customers an e-mail with the links to advisories and its disclosures.
Incorrect
A member shall display the advisories and disclosures on a member’s website in order to be considered sufficient. It is also sufficient if the distribution methods are designed to achieve customer awareness and the disclosure language is prominently displayed. They must also consider including the activities and disclosure language in a booklet of risk disclosure. This booklet will then be distributed to customers or sending customers an e-mail with the links to advisories and its disclosures.
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Question 2 of 10
2. Question
Which of the following statements is correct regarding the research reports of promotional material under the National Futures Association Compliance Rule 2-29?
Correct
It is not considered a promotional material if the research reports are for the underlying securities. This is not covered by the National Futures Association Compliance Rule 2-29. There are certain research reports which would be considered as promotional material. This includes the research reports that mention security futures products or strategies included in it. These research reports, which are considered a promotional material, must fully comply with the National Futures Association Compliance Rule 2-29.
Incorrect
It is not considered a promotional material if the research reports are for the underlying securities. This is not covered by the National Futures Association Compliance Rule 2-29. There are certain research reports which would be considered as promotional material. This includes the research reports that mention security futures products or strategies included in it. These research reports, which are considered a promotional material, must fully comply with the National Futures Association Compliance Rule 2-29.
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Question 3 of 10
3. Question
In discretionary accounts, under authorization and approval, which of the following is the exemption with regards to the trading of security futures in a customer’s account?
Correct
Under the approval and authorization of discretionary accounts in security futures, it is stated that no member related with a member shall have any discretionary power with respect to an account of a customer in trading of security futures. No person related to a member shall accept such order for security futures other than the customer, however, there is an exemption that is under the provisions of Rule 3260. Unless the customer’s written authorization required in this rule shall approve such an account for security future trading.
Incorrect
Under the approval and authorization of discretionary accounts in security futures, it is stated that no member related with a member shall have any discretionary power with respect to an account of a customer in trading of security futures. No person related to a member shall accept such order for security futures other than the customer, however, there is an exemption that is under the provisions of Rule 3260. Unless the customer’s written authorization required in this rule shall approve such an account for security future trading.
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Question 4 of 10
4. Question
Under the authorization and approval of discretionary accounts, who of the following shall be designated in supervising security futures activities in reviewing discretionary accounts?
Correct
In determining if an account should be accepted for security futures trading, a firm must designate a qualified principal in supervising security futures activities in reviewing discretionary accounts. To know if the customer was able to comprehend and know about such risks of strategies planned, a principal who recognized an account shall have a reasonable source. They should also preserve the record of the basis for such purpose.
Incorrect
In determining if an account should be accepted for security futures trading, a firm must designate a qualified principal in supervising security futures activities in reviewing discretionary accounts. To know if the customer was able to comprehend and know about such risks of strategies planned, a principal who recognized an account shall have a reasonable source. They should also preserve the record of the basis for such purpose.
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Question 5 of 10
5. Question
Under the discretionary accounts, which of the following shall be made for every transaction in security futures contracts?
Correct
Under the discretionary accounts of security features, all transactions must be recorded. For every transaction in security futures contracts, a record shall be made with respect to a member or person who has exercised his or her discretionary authority. Other information that must be included in such a record is the name of the customer, the contracts’ designation and number, price, date, and time when a transaction took effect.
Incorrect
Under the discretionary accounts of security features, all transactions must be recorded. For every transaction in security futures contracts, a record shall be made with respect to a member or person who has exercised his or her discretionary authority. Other information that must be included in such a record is the name of the customer, the contracts’ designation and number, price, date, and time when a transaction took effect.
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Question 6 of 10
6. Question
In recording transactions of discretionary accounts of customers, which of the following must be included in the record of transactions?
I. The name of the customer must be stated
II. The age of the customer must be included
III. The date when a transaction took effect
IV. The time when the transaction was madeCorrect
It is stated that in recording transactions of discretionary accounts that for every transaction in such contracts of security futures, a record shall be completed. Important information that must be included in such a record is the names of the customers. Next, the security futures contracts’ designation and number must be indicated, and the contract’s price must be stated. Lastly, the time and date when the transaction was made must be specified in such a record.
Incorrect
It is stated that in recording transactions of discretionary accounts that for every transaction in such contracts of security futures, a record shall be completed. Important information that must be included in such a record is the names of the customers. Next, the security futures contracts’ designation and number must be indicated, and the contract’s price must be stated. Lastly, the time and date when the transaction was made must be specified in such a record.
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Question 7 of 10
7. Question
In suitability for security futures, no member shall recommend to a customer nay trading strategy for the purchase or sale of security futures. Which of the following may be the exemptions about this matter?
I. A member gives strong grounds about the basis of information furnished by the customer
II. If the member does not know anything about such trading strategies
III. Such a member does not have realistic and practical grounds
IV. If the member knows the recommended transaction is not unsuitable for a customerCorrect
It is stated in the suitability for such security futures is that no member or person related to a member shall recommend any trading strategies to a customer. Unless a member or person related to another member has reasonable and strong grounds regarding the basis of the information equipped by a customer after an accurate inquiry by a member. This is regarding the investment objectives and financial needs of the customer.
Incorrect
It is stated in the suitability for such security futures is that no member or person related to a member shall recommend any trading strategies to a customer. Unless a member or person related to another member has reasonable and strong grounds regarding the basis of the information equipped by a customer after an accurate inquiry by a member. This is regarding the investment objectives and financial needs of the customer.
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Question 8 of 10
8. Question
Under Security Futures, which of the following are true about the violation of by-laws and rules of FINRA?
I. A finding of a violation of any provision of FINRA rules, that a member or associated person may be deemed with just and equitable principles
II. Under this can also be about the violation of by-laws and rules of a Registered Clearing Agency
III. A member engaged in security futures transactions cleared by a registered clearing agency may be deemed to conduct equitable principles of trade
IV. The violation of by-laws and rules of FINRA is not related to any member or associated person engaged in security futures transactionsCorrect
Under the violation of by-laws and rules of FINRA or a Registered Clearing Agency of Security Futures, there are things that should be reminded of such violations. It is stated in FINRA disciplinary proceedings that a violation found of any provision of the given rules under Section 17A(b)(8) of the Exchange Act that a member or associated person that is involved with transactions of security futures and cleared by a registered clearing agency or just by simply engaging in such transaction may be believed to conduct unreliable with just and reasonable principles of trade and defilement of Rule 2010.
Incorrect
Under the violation of by-laws and rules of FINRA or a Registered Clearing Agency of Security Futures, there are things that should be reminded of such violations. It is stated in FINRA disciplinary proceedings that a violation found of any provision of the given rules under Section 17A(b)(8) of the Exchange Act that a member or associated person that is involved with transactions of security futures and cleared by a registered clearing agency or just by simply engaging in such transaction may be believed to conduct unreliable with just and reasonable principles of trade and defilement of Rule 2010.
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Question 9 of 10
9. Question
Which of the following is true in reviewing promotional material prior to its first use as stated by the National Futures Association?
I. The accuracy of the promotional material will not be verified by the National Futures Association.
II. The review would normally arise within 14 calendar days by the National Futures Association.
III. A month would be the shortest time for the National Futures Association to review the promotional material.
IV. The National Futures Association is responsible for the verification of the accuracy of the promotional material.Correct
The promotional material is subject to review prior to its first use offered by the voluntary program by the National Futures Associaton. This review program would normally be done within 14 calendar days. The members of the association will be notified through email upon the completion of the said review for promotional material. The National Futures Association is not responsible for the verification of the accuracy of promotional material. They would not be precluded from raising compliance issues with the content of the promotional material or instituting a disciplinary action if such misstatements and omissions occur. A member should not rely on the review of promotional material to detect misstatements and other ommissions of the promotional material.
Incorrect
The promotional material is subject to review prior to its first use offered by the voluntary program by the National Futures Associaton. This review program would normally be done within 14 calendar days. The members of the association will be notified through email upon the completion of the said review for promotional material. The National Futures Association is not responsible for the verification of the accuracy of promotional material. They would not be precluded from raising compliance issues with the content of the promotional material or instituting a disciplinary action if such misstatements and omissions occur. A member should not rely on the review of promotional material to detect misstatements and other ommissions of the promotional material.
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Question 10 of 10
10. Question
Which of the following shall be reviewed in the promotional material with written procedures for the on-site examination?
I. The written report regarding the promotional material shall be reviewed prior to its submission for review.
II. The customer order procedures are included in the review for promotional material together with the customer account files.
III. The discretionary accounts shall be reviewed by the National Futures Association under their review program.
IV. The handling of customer funds shall be reviewed together with the customer complaints and sales practices.Correct
The customer account files, customer order procedures, discretionary accounts, sales practices, customer complaints, handling of customer funds, and proprietary trading shall be subject to review. These are the written procedures for the on-site examination which must include the steps in reviewing these areas. After the completion of an on-site visit, a written report must be prepared. This written report shall include the findings and discussion with the branch office managers or guaranteed IB’s.
Incorrect
The customer account files, customer order procedures, discretionary accounts, sales practices, customer complaints, handling of customer funds, and proprietary trading shall be subject to review. These are the written procedures for the on-site examination which must include the steps in reviewing these areas. After the completion of an on-site visit, a written report must be prepared. This written report shall include the findings and discussion with the branch office managers or guaranteed IB’s.